January 31, 2018 | Washington’s “War on Washing Machines”

Bill Bonner

Is an American author of books and articles on economic and financial subjects. He is the founder and president of Agora Publishing, and author of the daily financial column, Diary of a Rogue Economist.

CORK, IRELAND – The U.S. president gave his assessment of the situation last night.

No mention was made of the fact that the country is going broke…

…or that rising interest rates threaten the fake-money system…

…or that tax cuts, along with additional military, infrastructure, and entitlement spending, will surely bring on a financial calamity…

…or that his protectionist trade policies will raise consumer prices, drive up interest rates even further, and depress output.

Trade War

Spoiled for choice, today, let us look more closely at trade restrictions.

“The president’s action makes clear again that the Trump administration will always defend American workers, farmers, ranchers, and businesses,” said U.S. Trade Representative Robert Lighthizer last week.

“Trade wars are fought every single day,” added Secretary of Commerce Wilbur Ross in Davos.

The action to which Mr. Lighthizer referred was the president’s bold attack – hitting foreign-made washing machines, refrigerators, and solar panels with tariffs and import duties.

Left to their own devices, sellers and buyers are never at war. Instead, they always cooperate on win-win deals.

Both expect to come out ahead… or they wouldn’t do the deals. And since they generally do come out ahead, the economy comes out ahead, too.

The baker bakes better bread than the plumber. The plumber’s connections leak less often. Trading with each other, they both end up with more of what they want than they would have otherwise had.

Restraining trade with tariffs and regulations, on the other hand, produces winners and losers… and makes society poorer.

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Winners and Losers

As to the winners from the latest trade barriers, there was one obvious one: U.S. home appliance company Whirlpool…

Trade Bullies

They use their judgement, prejudices, and delusions to choose the one that gives them the best deal. As The Black Swan author Nassim Taleb says, they have “skin in the game.”

It’s their time… their money… and their clothes that are at stake. If alleged “currency manipulation” – whatever that is – matters to them, they are free to take it into consideration.

The trade bullies have no skin in the game. They don’t care if you have less choice… pay more… and get an inferior deal.

They can say whatever BS they want… and pimp themselves up by claiming to represent the “workers” and “businesses” while pretending that only they know what deal is “fair.”

But what they are really doing is what governments always do: exploiting the many for the benefit of the few.

A letter addressed to the Diary from a dear reader in Australia tells us that the price of hooking up solar power Down Under is only half of what it is in the U.S.

The writer attributed this difference to heavier regulation in the U.S., sharply reducing the benefit of solar power.

And now, with new costs imposed on foreign-made solar panels, the entire industry – which was expected to be the largest single source of new employment in the U.S. in the next 10 years – is under a cloud.

But shares in U.S. solar panel maker SunPower are up nearly 10% since last Wednesday.